It’s June 15th, 2018 and three years ago I incorporated Narrows Hill LLC as an entity to produce, develop and license my invention, the Card Caddy, and follow-on products. According to my business plan, by now I was supposed to be making enough money to pay myself a partial salary, but instead I’m planning on closing my office, scaling back the business to the most very basic elements and winding down operations so that I can get a second job to start paying off the debt I incurred to start and continue the company. In this post, I go over what happened between then and now and hopefully give even just one aspiring new business owner some items to think about.
TLDR: Have off-ramps for your business and stick to them – don’t throw good money after bad. Just continuing to keep working harder won’t save a product that’s not going to make it.
In mid-2015, things looked great for Narrows Hill and the Card Caddy. In the Spring of 2015, I had just completed a successful Kickstarter for the original version of the product, and had won a business plan competition for Narrows Hill. In that plan, I had goals to license the product in three years and have revenue of around $1 million per year. Three years into reality, there hasn’t been even an inkling of a interest in anyone licensing the product, and net revenue for this year is around $10k.
Here’s why I thought the Card Caddy had such great potential:
- Solves a couple of everyday problems and is a “feel good” product (more face time, less screen time)
- Has a massive potential market (100s of millions of card decks sold each year, and everyone has a deck of cards) and diverse demographics
- Low price point, low production cost, easy to ship, store and package
- Lots of potential for product line expansion (new accessories, different sizes, etc)
My general plan was to build up sales, first direct to consumers online, then onto smaller retailers, then distributors, then to big box retailers. Along the way, I would use the sales history to promote the value of licensing the product to key target companies. I figured the idea itself was a great selling point, but as sales stacked up, the licensing potential would also build (as well as the value of the deal I could push for!)
Also along the way, I planned to use Kickstarter to fund the production of new products. I launched an unsuccessful campaign in early 2016, and a successful one in mid 2016 that I was able to produce the Double Decker and Accessory pieces. The successful Kickstarter campaign was a disaster in terms of actually fulfilling the rewards, both in part my fault and my suppliers (but I picked them, so it really all comes back to me). I finally finished fulfillment in late 2017 and it was a big financial set back, too. I just had another unsuccessful campaign for my Dice Tower. I could (and should) write a whole blog post on my latest Kickstarter, but the point of mentioning them is that I have been attempting to introduce new products under the Card Caddy line in addition to selling the base product.
Mid 2017, it really became clear that the business was in trouble. There had been no significant progress on getting into any major retailers, no hint of interest from anyone in licensing it, cash was very low, I had the Kickstarter rewards to fulfill and sales had been flat for the past year. I really think this should have been my off-ramp, but I used credit cards to keep things going, really until now. The business is just self sustaining right now, but there is a mountain of debt, and no clear way to grow to pay it off.
What I tried
I had two main strategies for building sales and getting to a licensing deal: 1) exhibit at trade shows and cons to make big sales and meet contacts from the industry; 2) sell online through my website and Amazon direct to consumers, as well as go to comic and game cons to build the brand and reviews.
Licensing was obviously the big overarching goal. I targeted 6 companies initially that I definitely wanted to get to pitch the Card Caddy to. Two big toy and game companies (Mattel and Hasbro), the two biggest playing cards manufacturers (US Playing Cards and Cartamundi) and two big deck box makers (UltraPro and BCW). Mostly through exhibiting at the trade shows (You can read about some of them: Toy Fair, ChiTAG, ASTRA, INPEX), within 6 months of being in business, I was able to pitch the Card Caddy to a senior-VP level person at each of these companies. No deals came from any of these conversations, not even close, but for the most part, these contacts were complimentary on the product, just saying it wasn’t what they were looking for.
Big box retailers
I also had a group of retailers targeted that I thought would be a good fit for the Card Caddy. Walmart and Target (large game sections, Uno and playing cards always in the impulse buy area, and special CTG card areas); Barnes & Noble and Books a Million (big game sections); Walgreens, CVS, Rite Aid (growing game areas); Cabelas and Bass Pro Shops (outdoor and travel). I didn’t have as much luck actually speaking to a person from each of these stores, but I at least got an emailed “no” from all of them. You can read about my Walmart pitch experience here. Most of the rest were the typical “nice product, but not what we’re looking for”.
Distributors and specialty stores
To get into local toy, game and comic stores, I targeted the main distributors I could find, and mostly again through the trade shows, I was able to pitch to ACD, Alliance, Potomac, PHD, GTS, Southern Hobby and some others. I was able to talk directly with the buyers for most of these distributors and get the polite but firm “no”. This time, though, the reason was that they needed to see some more sales history at the small retail store level. OK, I can live with that – I checked back in periodically with them after I built up more direct-to-store sales, but no big deals with distributors ever came out of it. I also pitched to hospital gift shop, airport and convenience store suppliers. Not as teneacious about getting to a firm answer, but I heard back from around 15 of 20 companies I pitched to in this area.
I tried out three times for Shark Tank (Posts on Take 1, 2, and 3) and applied for every online and TV product showcase (HSN, QVC, Evine, etc) and As Seen on TV product scout I could find. I pitched to every toy and game sales rep and company I came across – only one picked me up and after a year hasn’t produced any sales. I pitch regularly to media outlets, review blogs and any other publicity sources I can think of. Here’s a screenshot of a couple of hours of researching “mom blogs” that reviewed toys and games like mine and had a open submission policy – none of them responded.
Hopefully, I don’t seem too bitter and angry recounting all of these actions – I went through all of them to demonstrate that I’ve run down pretty much every lead, idea and channel that I can think of and am really no closer to my goals of building sales and licensing the product. Sometime around when I should have used the “off ramp” I should have realized that if everyone up to this point has passed on the Card Caddy, what are the chances the next person will?
I did have some successes. Most of the time, it was just enough and just at the right time to keep me going.
Amazon has pretty good sales volumes of the Card Caddy, but I make so little per unit that it’s tough to push that channel. I was accepted into the their Launchpad program, highlighting products from new start-ups, but was informed that I had “graduated” out of the program a year later (even though products like Exploding Kittens and Watch Ya Mouth are still on Launchpad).
On the distributor side, Lion Rampant, a Canadian distributor did make a good sized buy at my first NY Toy Fair, but when I saw them next year, they weren’t interested in a reorder. Camping World, a big box retailer for RV and camping supplies did put in an order, and it’s the only big retailer I can go to and see my products on the shelves. That was about a year ago and they haven’t sold through on the first order yet. I’ve sold the Card Caddy to over 100 local stores and I feel like that’s a pretty good accomplishment. Every small success validated that I should keep going, and that the “big break” was just around the corner. Again, with a solid “off ramp” and plan for failure, I may have been more rational about these successes.
Why it didn’t work
My overarching goal for the Card Caddy and the business was to license the product to a big company and collect the royalties. To build up to a good deal, I expected I would have to build sales to a substantial level. To be honest, I’m still not entirely sure why I didn’t make it. Here are a couple of reasons I think contributed.
Too clever by half and a couple of decades too late?
Maybe the Card Caddy is just not a product that has big sales potential. Sure, it solves some common problems, but do people really care enough about them to bother buying it? And, people are definitely not playing cards like they used to before the era of smartphones. So, it just may be a niche item that a small group of people really like, but never really gets past a few thousand users.
Hall of Shame
I made some bad decisions with companies and people I did business with. That’s enough for a whole other blog post here. Would avoiding any or all of them have saved my business? Probably not – I wasted a lot of money on them, and maybe if that money had been better directed at marketing, maybe I would have broken through, but given all the other avenues I tried without success, I’m not sure that money would have resulted in a success.
Maybe. I’m not a big believer in luck, good or bad, but boy, I really felt like I’ve gotten some bad turns with this business. I have heard “This hasn’t happened in 20 years of doing business” with various delays, overruns, mistakes, failures, etc so many times that I do start to feel like the stars are aligned against me on this one. One quick example is that my patent attorney, who had been the one bright spot of service providers to me, totally dropped the ball on the prosecution of my patent and now it may be lost forever. The jury’s still out on whether I’ll still be able to get the patent, but she was universally well reviewed and no one had ever heard of her just totally missing a filing, except for mine. Looking back through my business history, I can think of 4 or 5 other examples like this where events just seemed to fall apart that never had before.
Marketing and packaging
I did not start with enticing packaging and I think that hurt the sales where I actually managed to get a small distributor or store chain to buy in bulk. I’ve only had a few re-orders, and I think the product sits on shelves because the packaging does not draw people in. I have also not been able spend a lot on marketing, either online through banner ads on targeted sites or in print like trade magazines. My plan was to get some sales under my belt, get some feedback on the product, and then improve and increase marketing and packaging from there. The cash flow never really supported that, and maybe the money I lost in some bad decisions above may have let me do more actions to increase sales.
As for now, in the fall after GenCon, I’ll likely close my office space, move everything back into the garage or basement and close down everything but sales through my website and maybe Amazon. And then I’ve got to try to find some other part-time work to pay off the mountain of debt I built up during the last few years in this business. Although we’re probably in no danger of living on the streets, this business has definitely impacted my life negatively over the past year – I’ve gained a lot of weight, had started smoking again (have recently quit again for 6 months now), been drinking more and relationships with friends and family became distant. I think coming to terms with the failure was the turning point and although the next few years will be tough, I’ve come to terms with it.
The moral of the story – have a plan for failure. When will you throw in the towel? Set a defined point that you won’t put more money into the business and stick to it.
Update July 6th
Been a couple of weeks since I posted this and BY FAR it has been my most read blog post EVER. I posted a link to this on a Facebook group for boardgame developers and it got some good engagement there, so I thought maybe some users on BoardGameGeek would be interested and posted in there under the game developer fourm and it really got a lot of reads and conversation going.
So ironically, the story of my failure has been one of the most successful things I’ve done. But seriously, the comments and support have been great from the community.